Improving the Design, Quality and Affordability of Residential Intensification in New Zealand - CityScope Consultants

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Improving the Design, Quality and
Affordability of Residential
Intensification in New Zealand


CityScope Consultants


Centre for Housing Research,
Aotearoa New Zealand

June 2011
Improving the Design, Quality                                       and         Affordability             of      Residential
Intensification in New Zealand

Richard Dunbar and Philip McDermott
CityScope Consultants Ltd
For the

Centre for Housing Research
Aotearoa New Zealand

June 2011

The information in this report is presented in good faith using the best information available to us at the time of preparati on. It is
provided on the basis that CityScope Consultants Ltd and its associates are not liable to any person or organisation for any
damage or loss which may occur in relation to that person or organisation taking or not taking action (as the case may be) in
respect of any statement, information, or advice conveyed within this report.
Key Points


1     Introduction                                                               1
    1.1     Study Goal                                                            1
    1.2     Research Objectives                                                   1
    1.3     Research Method                                                       2
2     Attitudes, Preferences, and Behaviour                                      3
    2.1     Higher Density Housing: The Literature                                3
      2.1.1    What is Residential Intensification?                               3    Housing Density                                                3    Quality                                                        4    Affordability                                                  4    The Nature of Housing Markets                                  5    Demand                                                         5
      2.1.2    Higher Density Housing in New Zealand                              5    A History of Detached Housing                                  5
      2.1.3     The Auckland Experience                                           7
      2.1.4     Pulling it All Together                                           9
      2.1.5     Governance Issues                                                10
      2.1.6     Overview: New Zealand Experience                                 11
      2.1.7     A Market Perspective                                             12
   Most People Don‟t Want Higher Density Housing                13
   Focusing on Transitional Behaviour                           13
   Motivation and Values                                        14
    2.2    Potential Demand for Higher Density Housing: the Market               15
      2.2.1    Projected Demand                                                  15
      2.2.2    Comparing Expectations with Outcomes                              16
      2.2.3    The Private Rental Market                                         17
      2.2.4    Institutional Constraints                                         19
      2.2.5    Projecting Rental Demand in Auckland                              20
      2.2.6    The Significance of Residential Submarkets                        21
      2.2.7    Composition of Demand                                             23
    2.3     What the Market Thinks: the Buyers                                   25
      2.3.1     Focus Groups: Key Conclusions                                    25
      2.3.2     What do Households Want?                                         26
      2.3.3     Perceptions of Medium-Density: What We Don‟t Like                27
      2.3.4     Perceptions of Medium-Density Housing: the Trade-offs            27
      2.3.5     Perceptions of Medium-Density Housing: What we Could Live With   28
      2.3.6     The Big Challenge: Protecting the Dream                          28
    2.4     What the Market Thinks: the Residents                                29
2.4.1     Findings                                                29
      2.4.2     The Case Studies                                        30
   Tuscany Towers                                      30
   The Aston, Grey Lynn                                31
   Hanson Street, Mount Cook                           31
   Addison, Takanini                                   31
   Urban Ridge, Tauranga                               32
      2.4.3    Design Considerations                                    32    Exteriors                                            33    Shared Spaces                                        33    The Setting                                          34    Community Characteristics                            34    Neighbourhood characteristics                        34    Connectivity                                         35
      2.4.4    Tenure and ownership type                                35
   Freehold Tenure                                     35
   Unit Title                                          35
   Freehold with Some Shared responsibility            36
   Community title                                     37
   Cross lease                                         37
   Renters                                             38
      2.4.5    Tradeoffs in Dwelling Selection                          38    Outer Bounds                                         38    House Choice                                         38    The Setting                                          39    Accessibility                                        39    Renter Households                                    40
      2.4.6    Development Challenges                                   40    Cost                                                 40    Planning Delays                                      41    Fees                                                 42    Development finance                                  42    Public Education                                     42    Possible Solutions                                   43
      2.4.7    Conclusions                                              43
3     Key Findings                                                      45
    3.1     The Significance of Market Segmentation                     45
      3.1.1   Dispersed Medium Density Housing and Spill-over Effects   46
      3.1.2   Defining Segments                                         46
      3.1.3   Geographic Submarkets                                     48
    3.2    The Proposed Segmentation                                    48
      3.2.1     Buyers                                                  49
      3.2.2     Residents                                               49
      3.2.3     Matching Segments and Housing                           49
4     Conclusions and Guidelines                                        50
4.1    The Nature of Guidelines                                                                       50
    4.1.1    Implications for this study                                                                51
  4.2    Preferred Attributes                                                                           52
    4.2.1     Differentiating Between Domain and Sanctuary                                              53
    4.2.2     Attributes of Domain                                                                      53     Neighbourhood Amenities                                                             54     Urban Landscape                                                                     54     Scale of Development                                                                55
    4.2.3    Attributes of Sanctuary                                                                    55      Dwelling Site and Layout                                                             56      Capacity                                                                             56      Comfort                                                                              57      Quality                                                                              57
  4.3      Affordability                                                                                58
  4.4      Governance and ownership                                                                     59
    4.4.1   The Unit Titles Act 2010                                                                    59
    4.4.2   Consequences of unit title                                                                  60
    4.4.3   Rental tenure                                                                               60
  4.5    From Planning to Implementation                                                                61

List of Tables
Table 1.    Projected New Dwellings Per Year, 2006-2026 ................................................. 15
Table 2.    Residential Relocation, Auckland Region 2001-2006 ........................................ 22
Table 3.    Distribution of Multi-Unit Housing, Auckland 1996-2006 .................................... 22
Table 4.    A Typology of Housing Demand Segments ....................................................... 47

List of Figures
Figure 1    Dwelling Building Consents Issued, New Zealand 1996-2010                                    16
Figure 2    Changes in the Structure of Regional Rental Market, 1996-2006                               18
Figure 3    Changing Household Composition, 2006-2031                                                   23
Figure 4    Projected Distribution of Younger and Older Adults, 2006-2031                               24
Key Points
This study addresses the market demand for medium density housing, focussing on what
would make it more attractive to more people. It points to a complex market of diverse
segments making complex trade-offs made within affordability and geographic constraints.
It is important to understand the nature of this demand, though, as adoption of medium
density housing has not matched expectations. This may reflect:
   The limited market for centralised, multi-medium density housing;
   A mismatch between where plans are directing housing and where the market lies;
   Supply difficulties with recent development that feed negative market perceptions.
The resistance to medium density housing observed is consistent with overseas experience.
New Zealanders‟ long-standing cultural preference for detached housing on individual
sections has been reinforced by the leaky homes episode and failures in the developer
driven, retail investor apartment market. Rejectors see medium density housing as inferior:
characterless, drab, monotonous, cramped, leaky, subject to the complications of bodies
corporate, lacking privacy, noisy, insecure, lacking an outlook, lacking hobby and storage
space, having parking problems, not allowing pets, and with poor prospects for capital gains.
Despite this, the residents of low rise apartments, terrace development, and high density
detached housing interviewed were generally happy with them. (This may be coloured by
the relatively new state and quality of case studies developments. No apartments above
four storeys were covered).
Consequently, changing tastes and experience could lift long-term acceptability of residential
intensification, with apparently low adoption to date a sign of over-optimism in forecasts and
policies regarding the rate at which this might happen.
The influences on choice can be organised across three levels spatial resolution:
1. accessibility to activities at the city or sector-wide level, including how easy it is to get to
   jobs, higher order services and retailing, formal recreation and cultural activities, and the
   like. In some respects this can be treated as a necessary condition, although the level of
   accessibility required will vary according to household characteristics;
2. domain, which encompasses the area over which day-to-day social relations are formed
   and regular or lower order transactions take place. This corresponds broadly with suburb
   or neighbourhood, and may include elements of the medium density complex itself; and
3. sanctuary, which refers to the dwelling, and may be influenced by the relationship of the
   dwelling to the complex and the immediate neighbourhood.
The must-have parameters people look for in their sanctuary are much the same in medium
density as in conventional housing: a safe and secure environment, privacy; space, light,
and warmth; and flexibility in how it may be used;
The discretionary things that add to the sense of sanctuary include privacy, ventilation;
storage and parking space, good indoor-outdoor flow; contemporary design and modern
fittings; areas for hobbies ( workshop, garden); and the capacity to personalise the dwelling.
Domain preferences are influenced by lifestage:
   Younger people (usually in non-family households) at the beginning of their working
    careers, housing ladder, and relationships tend to favour central city locations;

                                                                                   Summary Page i
   Most groups, especially young families, tend to favour familiar neighbourhoods;
   Family households tend to favour suburbs and town centres (this covers a variety of
    environments and implies greater flexibility than in the central city);
   Older families and post-family households tend to remain in their established
    neighbourhood, suburb, or sector of the city.
The resolution of preferences around sanctuary and domain will influence where and what
style of housing is generally favoured according to lifestage segment, with the actual choice
conditioned by limits of affordability, usually confined to geographic submarkets.
The association between type and location of medium density housing and lifestage and
socio-economic characteristics will not be consistent, though, as lifestyle preferences cut
across any orderly demographic or socio-economic segmentation of households.
Given that qualification, it is significant that future demand for new housing will be driven
increasingly by the preferences of empty nester and retirement households, many of which
own their dwellings. This gives them the capacity to purchase well-appointed medium
density housing that satisfies their expectations for domain and sanctuary. They are less
likely to favour small, centralised apartments than younger households and are more likely to
have a commitment to particular residential submarkets, built on a stronger sense of domain.
Consequently, residential intensification is more likely to be achieved with plans allowing for
diversity of locality and form. This, in turn, means meeting supply challenges in suburban
environments where land is more fragmented and there are fewer brownfield opportunities
than associated with the centralised developments of the recent past. Intensification in
suburban areas also raises a greater risk of resistance to spill-over effects from established
households. It calls for a flexible approach to the location and form of medium density
housing and a public commitment to maintaining the quality of the wider domain.

The report draws on buyers‟ preferences and residents‟ experiences to identify design and
quality features that might improve the medium density housing offering. Diversity of
demand and diversity of potential settings mean that it is difficult to set strict guidelines, the
study offers a series of principles that might be applied to individual developments. It
distinguishes attributes of neighbourhood and the wider development (domain) from those
relating to dwellings (sanctuary). It highlights the importance of accessibility, safety and
security, and privacy, and identifies a range of other matters which will influence the
acceptability to a greater or lesser extent dependent on market and geographic setting..

The report also offers three general recommendations:
Affordability: Planning and policy should provide for a wider distribution, greater diversity,
and greater flexibility of medium density housing than has prevailed in the recent past.
Supply: A more integrated, consumer-centric, and collaborative approach to policy,
planning, design and development should offer cost and supply benefits.
Ownership: Attention should be redirected from centralised apartment buildings to styles
and standards of medium density housing that will appeal to established, owner occupiers.

One outcome of the third recommendation may be to free up the market for existing houses,
increasing the options for first home buyers, including the rapidly expanding intermediate
housing market segment (two incomes, cannot afford a house) and young families.

                                                                                 Summary Page ii
Executive Summary
Study Objective

This research was for the Centre for Housing Research Aotearoa New Zealand. Its aim was
  Identify those features of residential intensification that need to be addressed to make
  high(er) density housing a relatively more attractive option for an increased number of
  New Zealanders.
Four working papers underpin this research. They are attached as appendices in Volume 2
to this report. They:
1. Review the New Zealand and international literature;
2. Evaluate the information base informing policy expectations for increased demand for
   higher density housing in new Zealand;
3. Report on focus group research into the attitudes and preferences of people currently or
   recently active in the Auckland housing market;
4. Consider the experience of residents of five medium-density developments, in Auckland,
   Tauranga, and Wellington.

The study focuses on consumer experience and attitudes to identify attributes of medium
density housing that might increase its market appeal and uptake. It also raises related
matters that will influence the market. These include changing home tenure (more rentals),
governance matters (the role of the body corporate), and barriers to supply. The study
covers these matters to the extent that they may influence market acceptance.

The Policy Setting

Higher densities are achieved by increasing the number of dwellings in a neighbourhood
either by increasing the land available to housing or by lifting the share of multi-unit
dwellings, or both, to achieve a lift in population or households per unit area.

 “Medium density” is used as a shorthand term for higher than traditional residential densities
in this study.

Over the past 30 years a number of reasons have been advanced for lifting densities. They
have included responding to the needs of smaller households, protecting productive rural
land, containing infrastructure costs, increasing the efficiency of public services, reducing
environmental impacts, enhancing urban design, boosting housing choice and affordability,
improving accessibility, and promoting a greater sense of community.

The needs of the consumers of housing do not feature directly or even high on this list.

Policies pursuing residential intensification have moved to the fore on the planning agenda
since the 1980s when the Auckland Regional Authority wrote it into the Auckland Regional
Planning Scheme (1988), shifting from promoting growth across the region to focus on
higher densities around centres within the built up area. Other cities have followed this lead
(Tauranga, Hamilton, Wellington, and Christchurch). Despite big differences in size and
circumstance, the common objective has been a more compact city.

                                                                               Summary Page i
Progress to Date

A review of the Auckland Regional Growth Strategy in 2005 noted
  “that intensified housing is associated with poor quality design and low amenity. ... poor
  quality construction; concern about long-term maintenance; poor layout; insufficient
  space; and lack of integration with surroundings” (Syme et al, 2005).

Resistance to high density living was confirmed in a 2007 update of the Auckland Regional
Growth Strategy. Limited progress may be based on: long-standing cultural preferences; the
association of higher density with inferior housing, transiency, poverty, and criminality;
difficulty delivering intensive housing that can compete on cost grounds with more favoured
detached dwellings; concerns over the operations of bodies corporate; the impact on existing
neighbourhoods and residents, and a dislike of housing in mixed use areas.

Resistance to Medium Density Housing

Research in New Zealand confirms resistance in the population at large and demonstrates
that the increased densities that have been achieved have been driven by a distinctive group
that favours inner city apartments: young people, in education or early career stage, singles
and couples and non-family households, and frequent movers. Continuing growth in
demand for central apartments will depend on just how much this group expands.

Medium density developments based on terrace, semi-detached, or detached housing better
reflect the mixed age nature of suburbs, including young families and older households.
Young families value the space, security, and amenity of the suburbs. Older households
may be in no hurry to move out of the family home with its space and flexibility, and when
they do tend to be committed to their current neighbourhood.

One driver of the shift into medium density housing has been declining home ownership.
The emergence of a large intermediate market of working households, often with two
incomes, that cannot afford to buy into even low priced housing is the most obvious
manifestation of this. Nevertheless, renters still aspire to ownership.

The international literature confirms this aspiration and a long-standing and widespread
resistance to increased housing densities that frustrates compact city policies in Australia,
the USA, and the United Kingdom. The discord between what people state apparently
favouring intensification in surveys or in response to discussion documents and their actual
decisions has been noted in these markets.

Understanding Housing Choice

Understanding motivations in the housing market means understanding the values
associated with housing in general. The key attributes people seek almost universally as
they move up the housing ladder – safety, security, space, and ambience – can be
encapsulated in the notion of domain. This sense of domain is likely to be weaker among
young people and others living in central apartments, many rented. It is likely to be stronger
in suburbs where the networks of relationships formed around the nuclear or extended family
and higher levels of owner occupancy create a stronger sense of attachment.

                                                                              Summary Page ii
Potential Demand

Policies for residential intensification rely on Statistics New Zealand (SNZ) sub-national
demographic projections. Future housing demand is estimated by extrapolating household
types by age cohort, or applying changes in average household size to projected population.

One such analysis was published by the Building Research Association of New Zealand
(BRANZ) in 2007. It projected 26,950 additional dwelling units needed a year nationally
(medium projection) for the ten years to 2016, and 28,860 a year from 2016 to 2026.

Multi-unit dwellings were projected to reach 38% of new houses nationally, compared with
25% between 1996 and 2006. In Auckland they were projected to jump from 36% of new
dwellings between 1996 and 2006 to 66% between 2016 and 2026. This implies a
substantial shift in the character of new housing. At the same time, ownership rates were
projected to decline from 67% in 2006 to 58% in 2026 and to 54% in Auckland.

The BRANZ projections at the national and regional level are broadly consistent with those
provided in similar reports.

Comparing Expectations with Outcomes

However, at the start of the 2006 to 2026 period multi-unit construction fell well short of the
average projected. Nationally, it accounted for 24% of all houses consented over the 15
years 1996 to 2010, but fell to 21% over 1996 to 2010 (the first four years of the projection
period), and just 17% in 2010. In Auckland the number of multi-unit consents from 2006 to
2010 (7,160) was just over a third of the figure for the previous five years (20,830).
Consents averaging 1,430 dwellings per years compared with a projection for Auckland of
4,560 per year between 2006 and 2016, a 69% shortfall.

Under conditions of recession multi-unit consents have fallen much more rapidly than
consents for detached housing. Even if the current shortfall is just a cyclical movement or
one-off response to the global financial crisis it is unlikely that movement back towards the
long-term projections (to 2016 or even 2026) can be achieved.

The Private Rental Market

In 2006 renters accounted for 26% of detached housing in Auckland, but 61% of multi-unit
dwellings. Only 27% of residents of inner city and 32% in outer city apartments in the three
metropolitan centres owned their homes, compared with 65% nationally.

Growing dependence on rental tenure is expected to support the growth of multi-unit
dwellings. However, the shift to multi-unit dwellings has not kept pace with the growth of the
rental sector. For example, while Auckland added 44,300 private rental households between
1996 and 2006 (DTZ New Zealand, 2008) it added 10,000 fewer multi-unit dwellings
(34,360), many of which would be owner-occupied in any case.

Institutional Constraints

The residential development sector virtually collapsed in second part of the 2000s, leaving a
significant gap to be filled if the rental market is to expand through comprehensive, medium
density development. A Boffa Miskell (2009) report flagged the following supply problems:

                                                                              Summary Page iii
1. Undue delays in consenting add to development cost and risk, leading to conservative
   designs or discouraging investment altogether;
2. Development contributions levied by councils are a deterrent to investing in residential
   development, especially given that areas for intensification often have poor infrastructure
   and the costs of upgrading fall on developers and, through them, prospective residents;
3. Poor financial practices have contributed to development company failures and a lack of
   confidence in the sector by debt and equity investors;
4. Banks resist the downward revaluation of overvalued vacant sites that might otherwise
   make them attractive to develop.

Council-related issues include planning and consent delays, under-capacity in infrastructure,
and expectation of large development contributions to address this.

Residential Submarkets

The propensity to move is spatially constrained: the majority of households move within a
sub-market that may be defined by neighbourhood or geographical sector (north, west,
central or south). Expectations that higher densities will be achieved largely by increasing
apartment living, brownfield redevelopment, and consolidation around centres and the CBD
need to be qualified by an understanding of these submarkets. Dispersed household growth
and containment of future demand within submarkets mean that the stock of multi-unit
housing needs to be increased substantially outside the CBD if the adoption of medium
density housing is to increase.

Composition of Demand

Indicative SNZ projections of household composition and age structure indicate the
demographic drivers of the shift towards smaller households, the main one being an
increase in single and two person households. Most people driving small household growth
from 2006 to 2031 will be empty nesters (aged about 50 to 64 years) and early or active
retirees (aged about 65 to 79 years). Together they account for 64% of projected growth in
smaller households, and older retirees another 21%. Analysis of apartment dwellers in 2006
suggests these groups are unlikely to favour living in central apartments.

The historical drivers of apartment living, young adults (20-29), are projected to account for
only 11% of national growth in the small household category, although 18% in Auckland.

What Buyers Think

Three focus groups were conducted among people active in the middle or lower price tiers of
the Auckland private housing market. They were grouped around whether or not they were
receptive to the idea of medium density housing. Overall, their top of mind responses to
medium density housing tended to be strongly negative. Medium density housing was seen
as characterless, drab, monotonous, cramped, leaky, subject to the complications of bodies
corporate, lacking privacy, noisy, insecure, lacking an outlook, lacking hobby and storage
space, having parking problems, not allowing pets, and with poor prospects for capital gains.
The association with a high share of rentals was also negative.

Housing location preferences common to all participants include proximity to family, access
to motorways and public transport, safety and security, and areas of like-minded people.

                                                                              Summary Page iv
Off-street parking and garage space are desired. An indoor-outdoor design with an external
area for relaxation, entertainment, and children and pets to play in is a common wish.

There were some variations in what groups wanted. Renters want stable, long-term
affordable leases. Home buyers want sections for children, a spacious 3-4 bedroom home,
and good insulation. Their choice is financially constrained, but influenced by school needs,
family responsibilities, and a desire for stability.

Settled couples buying a first home favour suburbs they are familiar with and proximity to
family, stand alone houses with a section, a garage, and minimal maintenance. Single
women living alone cover all ages (and may have children). Because of their financial
circumstances apartments are a serious option for them, especially if they offer safety, good
internal access, and “nice neighbours”.

Despite their preferences, a tight market is making it hard for people to achieve them, and
pushing them to consider the medium density option. Consequently, focus group
participants were able to identify what could make medium density housing work for them.

Attributes of sanctuary that might lead to greater acceptance of medium density dwellings
1.   Physical separation from neighbours;
2.   Private outdoor space;
3.   Large garages connected to the dwelling;
4.   Open plan design and a feeling of spaciousness;
5.   A modern, light home with a sunny aspect;
6.   Quality materials and architect-standard design.

Attributes of domain that might lead to greater acceptance of medium density neighbour-
hoods include:
1.   A mix of housing styles, ideally with nothing over two storeys;
2.   Some shared leisure facilities;
3.   Nearby parks, playgrounds, and safe places for children to play;
4.   A sense of security built into access and design;
5.   Cul de sac layouts, perhaps creating distinctive small neighbourhoods;
6.   Quality controls by means of covenant;
7.   On and off-street parking.

What Residents Think

Residents in five medium density developments were interviewed. These covered the city
edge (apartments in Grey Lynn in Auckland and Mt Cook in Wellington), inner and outer
suburbs (a terrace house development, Tuscany Towers, in New Lynn), intensive housing
(Addison, Takanini in Auckland) and one secondary city (small detached sections and
houses at Urban Ridge on the edge of Tauranga).

The location of developments is important. Different styles of neighbourhood attract broadly
different types of people. CBD fringe neighbourhoods attract younger households with higher
disposable incomes, focussed more on work and recreation opportunities. New Lynn is a
suburban centre in a lower income area with greater attraction to families. Medium density
housing in suburban localities tends to house more families and older people.

                                                                              Summary Page v
Connectivity is important regardless of location because travel linkages for work, study or
social purposes while quite widely distributed, are mostly within a 20-30 minute envelope.
Even with good public transport most non-local trips rely on private vehicles, primarily cars.

Although the attributes of a particular complex might be oriented towards the preferences of
a specific segment, this does not prevent households from quite different segments from
purchasing or renting in that complex.

Generally interviewees were satisfied with their medium density dwellings and could indicate
what was important to them at neighbourhood and community level, and with the complex
itself (based on shared spaces), the exterior, the dwellings, and their attributes (Table One).

   Table One: Desirable Attributes Identified by Medium Density Housing Residents
                         Domain                                              Sanctuary
       Recreation facilities, including parks.               A new dwelling
       Scale: the number of households in the                Modern and contemporary decor; design
       development                                           features that add value (e.g. high stud)
       Community interaction: networks and strength of       Quality of fixtures and fittings (e.g. appliances,
       ties Ethnic diversity and predominant nationalities   carpets, tap ware, bench tops)
       Household types and sizes                             Good condition; clean and tidy
       Quiet or noisy surroundings                           Low maintenance; less housework
       Price range                                           Capacity:
       Standard of maintenance                               Number of bathrooms
       Tenure mix                                            Cupboard space in kitchen and bathroom
       Crime levels.                                         Size of rooms and a sense of space,
                                                             especially living rooms; open plan with
                                                             balconies/decks/gardens helps
                                                             Storage space; especially when trading down
                        The Complex                          from bigger home
       Good stairwells and lift spaces in apartments         Garage; often used for storage
       Visitor parking spaces                                Comfort:
       Safe access roads                                     Natural light in all habitable rooms
       Adequate reserves                                     Access to sunshine
       Appropriate trees in appropriate places               Well insulated and warm
       Tidy gardens                                          Quiet; can‟t hear neighbours
                                                             Separate laundry (to contain the noise of the
                         The Exterior
                                                             washing machine)
       Visual appeal                                         Outside window in bathroom.
       Quality construction                                  Connection with the outside
       Good maintenance                                      Privacy; rooms not overlooked
       Security and safety                                   Outlook; views or landscape rather than of a
       Well designed parking areas                           building or fence
        Low maintenance                                      Storage space
       A sitting out area, which may be a balcony or a       Size of garage
       small garden                                           Adequate car parking for residents and
       The particular style of a dwelling; apartment,
       terrace, or town house

Most attributes identified are widely sought after. Some vary among segments. The number
of bedrooms obviously varies according to household composition. Older households tend
to favour single level units and a greater sense of spaciousness and privacy. Flat mates

                                                                                         Summary Page vi
look at the quality of personal space within and between bedrooms. Some households look
for more storage room than others, additional parking space, and so forth.

Shared space is an area of divergent needs and views. A key to how it is developed and
used is who pays, especially with recreational facilities. Outside the most expensive
developments, residents may resist the high fees involved in providing such facilities on site.

Unit title ownership is an increasingly common form of ownership for medium density
housing. While not all residents are happy with the rules around bodies corporate, there is
usually acceptance that, if effective, it makes life in the development better and protects the
value of individual properties.

There appears to be recognition that working through a body corporate is all part of the
package. There is acceptance that it is important to have a common under-standing of what
is and is not acceptable. In this way the chances of disharmony resulting from the behaviour
of others is diminished. The activities of the Body Corporate (through the property manager)
can contribute to a pleasant living environment

Choices and Trade Offs

The options from which households choose are usually limited, with tradeoffs taking place
within a price envelope and geographically constrained market. Ownership can complicate
trade-offs. Unit titles are viewed as a benefit if shared spaces are well maintained and where
an effective body corporate is seen as an assurance that property value will be maintained.
Others may see the fees and the rules as a negative.

The nature and range of facilities within easy reach also enter the trade-off, including shops,
schools, banks, and public transport, although they may be less important to car dependent
households than for those for whom the capacity to walk to services is important.

There are clear differences in trade-offs made between apartment dwellers and others.
Apartments (particularly small apartments) close to the CBD or major centres have the most
obvious target in the young professional singles and couples segments. Yet this does not
stop a diverse range of household types also occupying them.

This suggests that the way through the diversity of segmentation and the complexity of
trade-offs may be to ensure flexibility in multiunit design and operation regardless of setting.

Increasing rental tenure is reflected in some innovation and flexibility in supply already.
Additional forms include renting parts of another house with or without its own entrance,
sleep-outs, garages, attic or loft space. The housing choices made by renters are influenced
by circumstance, from looking for long term security through to renting between house
purchases. Some choose to rent in a development where they are considering buying to get
a better idea of the area and the housing. This may be more practical in today‟s tight market
in which people who cannot sell are choosing to rent their dwellings after they move on. It
also applies to new housing which cannot find a ready market of buyers at the desired price.

In choosing medium density housing the buyers and renters interviewed had effectively
rejected the traditional detached house and large section (possibly not by choice if
affordability had determined the choice). Private space within the sanctuary had effectively
been traded off for public outside in the domain, either in the immediate vicinity or in the

                                                                              Summary Page vii
wider area. Such a trade-off might be more likely at some lifestages compared with others,
with households with children most likely to resist it.

The quality associated with the “new and modern” also plays an important part. Quality
gains can compensate for loss of indoor and outdoor space, again within financial and
geographic constraints and the willingness to make the trade-off influenced by lifestage.

Dispersed Medium Density Housing and Spill-over Effects

One implication of diverse markets, housing motivations, and choices is that policies directed
at compact cities need to allow for the differentiation of demand and supply. One way is to
allow for medium density housing across a range of localities within geographic submarkets.

Under these circumstances medium density housing can range from traditional detached
houses on small sections, through semi-detached housing, terraces and units, to medium
(walk-up) and high rise apartment blocks, with design variants within these broad types. The
resistance of residents in traditional suburbs to medium density housing suggests that this
variety might be exploited to enhance compatibility with existing development. Intensification
of suburbs may be made more acceptable by such measures as creating public green
space, expanding community amenities, and implementing traffic management measures.

Market Segmentation

The fundamental driver of housing demand is life-stage, which broadly influences the main
transitions across the housing ladder (Table Two). Within a lifestage, segments‟ socio-
economic circumstances will influence housing expectations and the capacity to pay for
different forms and standards. Jointly, life-stage and socio-economic status will influence
attachment to a particular locality as well as shaping needs and preferences for different
forms of development and styles of housing. Even within similar demographic and socio-
economic categories households may choose quite different housing types, however, based
on their lifestyle tastes and requirements, creating a whole lot more potential segments.

It is the way in which lifestage, socio-economic status, and lifestyle combine preferences that
will define the most meaningful housing demand segments. However, the potentially large
number of segments resulting complicates forecasting the composition of the housing
market and prescribing design and quality in any detail. Predictability is also limited by a
tendency for households to make housing transitions at different ages (especially over
succeeding generations) and to move across socio-economic and lifestyle categories.

The solution to this complexity is to focus on commonly desired attributes initially, and to try
to design flexibility into development within these parameters. Flexibility is one of the key
attributes of detached housing that would increase the attractiveness of multi-unit dwellings if
it can be built into their design.

                                                                              Summary Page viii
Table Two: Segmentation Schema
   Segmentation                                 Socio-economic
                          Life stage                                              Lifestyle
         Type:                                      Status
                                                                       Personality, values,
                                             Education, income,
      Defined by:   Age, family status                                 attitudes, opinions,
                                                                       interests, activities
                                                                       Impact on preferences
                    Stages & transitions     Status defines
   Relevance to                                                        within & across lifestage
                    determine housing        expectations &
 housing choice:                                                       & socio-economic
                    needs                    capacity to meet them
                    Independence             Occupation                Work status and style
                                             Income                    Social & leisure activities
                    Family formation         Housing Tenure            Function of housing: asset,
                    Childbearing and         Location Quality of       expression of personality,
     Examples of    raising                  housing                   etc
      Indicators:                            Expectations of
                    Maturing Family                                    Location
                    Separation                                         Expectations of domain
                    Empty nester
                    Early retirement
                    Later retirement

Principles as Guidelines

This study has combined secondary sources with qualitative market research to identify a
range of attributes that should be considered in the policy, planning, and development of
medium density housing. One way to consolidate these findings from diverse sources is to
use them to develop guidelines that might to inform stakeholders across the housing “supply
and production chain”.

Guidelines to medium density housing used in New Zealand and elsewhere tend to focus on
type of structure and building form, reflecting the input and perhaps even the preferences of
designers rather than residents. They present a professional rather than market-oriented
view of the qualities that contribute to desirable – or acceptable – dwellings of different
densities. Yet it is the needs, expectations, and preferences (and trade-offs) of households,
the focus of the original research reported here, that will influence the rate of adoption. It is
difficult to see how the parsimony and simplification associated with most guidelines might
align with the needs of particular segments in particular localities. As they stand, guidelines
tend to be limited to the presentation of exemplars of different types of structure.

Given the complexity and dynamics of the market in terms of potential range of segments
and the ways in which households might transition among them, this may be the best that
can be done, with a limit to the extent to which the interaction of preferred attributes in
buyers‟ minds might be built into prescription.

For this reason, guidelines are presented below as a series of principles that might be
applied to policies, plans, designs, and developments in different settings and for different
segments. Underlying all of these is the need for flexibility to reflect contrasting contexts,
diverse segments, and changing lifestages, socio-economic circumstances, and lifestyles.

                                                                                  Summary Page ix
The Must Haves

Priorities among attributes will differ by segment. Some attributes, though, may be sought
after by all segments. These are the “must haves”, the features necessary, if not sufficient,
to ensure the marketability of medium density housing. These are summarised below.

(1) Accessibility

The key message is that a combination of proximity to local amenities and the ability to move
easily to other localities including the CBD will provide the accessibility people expect from
medium density development.

Principle Medium density housing requires locations which provide a high level of access to
local services and good connectivity to other parts of the city.

(2) Safety and Security

Primary among the must-haves are security and safety at the level of domain (the
neighbourhood and development) and at the level of sanctuary (the development and the

Principle: Treat safety and security as drivers behind the design of the complex as a whole,
its relationship with the neighbourhood, and individual spaces and dwellings within it.

Attributes of Domain

(3) Distribution and Diversity

The dominant location preference among established and older households is to stay more
or less in existing neighbourhoods or in submarkets defined at a sub-regional level. This
means that to encourage a greater variety of households to move to higher density
accommodation it is important to provide for opportunities to be widely distributed. This will
be supported by a wide range of medium density housing types.

Principle: Recognise in planning the desirability of introducing a variety of medium density
options (by way of housing types) across a range of locations.

(4) Neighbourhood Amenities

Neighbourhood amenities are important to residents of medium density housing. The value
of different amenities will vary by segment. Schools, parks and playgrounds are important to
families for example. Local shops and cafes are likely to be more important to non family
segments. Parks and reserves are important to residents in the suburban developments.

Principle: Medium density development should be favoured in areas with a range of nearby
community and commercial amenities; or developed in areas where there is a commitment
to the provision of such amenities.

                                                                              Summary Page x
(5) Urban Landscape

Neighbourhood appearance has a bearing on housing choice. The preferred urban
landscape has greenery and open space. Even with apartment dwellers there is some
concern over the impact of continuing intensification on the character of the neighbourhood.

Principle: The focus of urban design for medium density housing development should be on
the character and quality of residences, green spaces and the associated urban landscape;
where development takes place in a mixed use area the impact of unrelated uses should be
mitigated by appropriate design or planning measures.

(6) Scale of Development

Residents of apartments or comprehensive developments, like their counterparts in
predominantly single house suburbs, tend to resist further “massing” of the urban landscape
around them, the cumulative impact on character, and associated crowding. A preference
for smaller scale developments also reflects the perceived higher amenity levels associated
with walk-up apartments

Principle: Avoiding spill over effects and encouraging uptake of medium density housing will
be achieved by limiting the scale of individual developments (a maximum of three or four
storeys) and the local density of multiple developments.

Attributes of Sanctuary

(7) Dwelling Site and Layout

There is a wide range of attributes to be considered that will reinforce the sense of sanctuary
for residents of medium density dwelling, thereby improving its market place appeal. These
include spaciousness, privacy and private spaces, and security. Other attributes will enable
people to personalise their dwellings, including garden areas or balconies.

Principle: Medium density housing should be modern in design, with a layout that allows for
some personalisation supported by private outdoor space

(8) Capacity

Capacity can be provided by ample size of rooms, providing for flexibility in their use, and by
allowing for moveable partitions. It is also about the lifestyle a dwelling affords, reflected
storage space, space for hobbies, crafts, and work or study, and avoidance of visual
intrusion that might cut down the freedom or flexibility of use.

Principle: Medium density dwellings should be of sufficient size and capacity as to provide
adequate space, including storage space, and allow for flexibility, which may entail multiple
uses of rooms without visual intrusion.

                                                                              Summary Page xi
(9) Comfort

Comfort is influenced by layout and capacity. It is also influenced by the quality of materials
and fit out to the extent that they influence how easily people live “within the walls”.

Principle: Internal layout and treatment of external walls and windows and materials should
contribute to adequate natural internal light, ventilation, and good thermal and aural
insulation to enhance the liveability of dwellings.

(10) Quality

An assurance of structural integrity and the durability of materials have become “must
haves” as a result of the leaky building experience. Beyond that, an important appeal of
medium density living for many residents and potential buyers is the quality associated with
a modern or new dwelling.

Principle: The integrity of structure and materials is important to the market while quality
fittings will increase the attractiveness of medium density housing.

The preceding principles should foster flexibility, diversity, and innovation in location and
design that will broaden the appeal of medium density housing.

The following recommendations relate to wider issues that have emerged in the course of
the study which can influence the progress made in increasing medium density housing.
They relate to affordability, ownership, and implementation.


Dwelling prices and rentals have for some time increased faster than incomes. The difficulty
of assembling the land necessary for the comprehensive development necessary to achieve
lower building costs in medium density housing means there is an insufficient price
differential between multi-unit housing and detached dwellings to encourage a shift from the
latter to the former.

The affordability barrier to private housing might be best addressed by redirecting medium
density housing options to current owner occupiers, thereby freeing up second-hand stock in
areas and at prices that might enable the growing numbers in the intermediate housing
market and young family segments greater ownership opportunities.

More options for medium density housing in more parts of the city could reduce investment
and development thresholds also, increasing the capacity of the market to supply through a
proliferation of diverse, quality small and medium developments.

This implies a significant shift, though, from the sort of apartment stock that has dominated
the growth of the medium density market over the past decade, and far greater provision for
and encouragement of diversity in type, style, and location.

Recommendation: Review current plans and regulations affecting the construction of multi-
unit development with a view to increasing flexibility to promote diversity and innovation in

                                                                              Summary Page xii
new medium density housing throughout urban areas, including inner and outer suburbs,
and encourage a more flexible and active second hand home market.


The report has also highlighted issues around growing rental tenure, and the potentially
negative impact of a high share of renters on the sense of community for owner occupiers
and on property values. As the intermediate housing market expands and housing stress
increases, this division is likely to increase, together with the spatial segregation effect of
multi-unit dwelling, especially if dominated by small units in apartment blocks in central

Given a long-standing cultural, economic, and social commitment to owner occupancy in
New Zealand, though, its association with family and social stability and economic progress,
the aspirations of the population, and especially expectations associated with a maturing
population, maximising ownership should remain a priority in policies directed at medium
density housing. Ownership will be achieved more readily in settings which provide for
diverse household types, design and location. While policies directed at affordability should
ensure that rental levels remain reasonable, it can be argued that their objective should
remain facilitating the transition to ownership.

Recommendation: Recognise the social, cultural, and economic importance of home
ownership to the majority of New Zealand households and provide for the diversity of
housing development, including medium density dwellings that will help to meet those
aspirations while ensuring the operation of unit title arrangements helps to sustain the quality
and value of private housing in them.


There is significant potential for multi-unit housing to play a bigger role in the future. The
report has indicated what may work by way of design and quality, and proposed principles
and recommendations that should help in this. However, the experiences of residents and
other stakeholders suggest supply problems associated with lack of a coordinated approach
to development. Despite a public policy commitment to creating more capacity for smaller
households in smaller dwellings there are inconsistencies among and within agencies and a
lack of trust between the public and private sector parties involved.

The opportunity for intensification in suburban areas, which may call for a greater variety of
outcomes and rely on small scale initiatives, can be frustrated often by zoning regulations.
Attempts to achieve higher density living in greenfield sites may be frustrated by rigidity
around urban limits. The local public amenities that might increase the appeal of higher
density developments in more centralised areas may be lacking and councils slow in
progressing community facilities that might compensate residents for reduced private space
and reluctant to take on maintenance responsibilities after construction.

Without alignment of objectives among the various stakeholders, it is unlikely that the sorts
of increase in density that plans currently call for will be achieved in a satisfactory manner.

                                                                              Summary Page xiii
This may call for institutional as well as procedural changes that commit the key players to
collaborating through the course of planning, design, and implementation, and for better
engagement with the market from the outset.

Recommendation: Policy makers should identify how the policies, plans and targets
intended to increase housing densities will be implemented, including the role that planners,
infrastructure providers, other government agencies, private developers and investors are
expected to play; and consider alternative institutional frameworks for promoting integrated
planning, design, and development that is responsive to market needs and preferences.

                                                                           Summary Page xiv
1 Introduction
1.1 Study Goal
Urban planning in New Zealand today emphasises the consolidation of urban areas in the
interests of accommodating the growth of our cities in a more sustainable manner.

A key policy in this quest is housing more people in less space by increasing residential
densities. This is consistent with international initiatives promoting smart urban growth and
the design principles of new urbanism, especially with reference to increasing densities
( But, as discovered overseas, the adoption of higher residential
densities in New Zealand has not been as rapid or widespread as expected or intended by
planners and policy makers.

While land supply, cost, and regulatory constraints to intensification have been scrutinised,
less attention has been paid to consumer resistance. It can be argued that the focus of
policy analysis to date has only been on the supply side of the demand and supply equation.

The research reported here was undertaken by CityScope Consultants for the Centre for
Housing Research Aotearoa New Zealand (CHRANZ), and focuses on household demand
for medium density housing. The goal is to:
     Identify those features of residential intensification that need to be addressed to make
     high(er) density housing a relatively more attractive option for an increased number of
     New Zealanders.
Ideally, the results will contribute to the design, quality, and affordability of residential
intensification, making it a more attractive option to New Zealanders. In addition, it is
intended to provide a basis for quantifying the relative importance of different features of
medium density housing to the wider market through a subsequent quantitative survey.

1.2 Research Objectives
Several objectives were identified in the CHRANZ research contract:

1.        Identify and undertake case studies that evaluate the provision of rental and owner
          occupied residential intensification in a range of examples from urban and provincial
          New Zealand;

2.        Investigate internal and external design, quality, and affordability issues, spill over
          effects, and post construction governance and management using the case studies;

3.        Investigate the ways and degrees to which residential intensification has fostered
          meeting people‟s needs for work, play, schooling, transport and amenity, privacy and
          safety in the case study areas;

4.        Identify ways in which the interests of the community, developers, land owners, and
          potential new occupants of more intensive housing can be reconciled through better
          communication, design, and closer attention to spill over, third party effects.

                                                                                          Page 1
The brief called for the development of practical guidelines based on the findings that might
assist in reconciling the interests of the local community, developers, land owners, local
authorities, businesses, and potential occupants of more intensive housing.

1.3 Research Method
These objectives and questions have been addressed using several different methods.
Detailed discussion and supporting material are contained in a series of working papers.
These are contained in Volume 2 of the study.

The first working paper reviewed the international and New Zealand literature on higher
density housing. It covers policy expectations, the nature of housing markets, constraints on
choice, housing preferences, and consumers‟ views of higher density housing. Working
Paper 1 highlights generally negative attitudes towards higher density housing.

The second working paper reviews the information base informing policy expectations for
increased demand for higher density housing, and how that compares with recent residential
activity. It suggests that projected growth in demand for multi-unit dwellings may have been
premature. It also appears that the parallel focus on intensification within the central city
may not be as appropriate in the future. There are nevertheless grounds to expect that the
rate of adoption will pick up, although not necessarily in the localities anticipated in plans to

The third working paper involved focus group research with current or recent buyers or
renters in Auckland. The results reflected and confirmed the sources of resistance identified
in the literature review. Exercises undertaken by participants also began to identify the
attributes of neighbourhood, housing complex, and dwelling style that might make higher
density housing more appealing.

The fourth working paper reports on case study research with residents and other stake-
holders from five different medium-density developments. Three of these were located in
Auckland, one in Tauranga, and the other in Wellington. These indicate reasonable levels of
satisfaction among residents with their dwellings and lifestyles which help to highlight
attributes of dwellings, developments, and neighbourhoods that might add to their appeal.

This report consolidates the information gathered, examines areas of convergence and
divergence from the different sources, and draws general conclusions. It reports the findings
in a consolidated manner with the aim of informing the various parties in the supply chain –
planners, designer, developers, and builders – seeking to increase the attractiveness and
uptake of higher density housing.

Section 2 outlines the results of the underlying secondary and original research presented in
more detail in the working papers. Section 3 draws together the key findings about the
market and its composition. Section 4 focuses on the implications of these findings to
generate a series of principles and recommendations that might be applied to the design and
quality specifications of medium density housing within affordability parameters. They also
cover related matters around housing tenure and project implementation.

                                                                                          Page 2
2 Attitudes, Preferences, and Behaviour
This section summarises a review of the literature relating to the nature of higher density
housing, the rationale for its promotion, impediments to its adoption, and responses of the
market. It draws on international and New Zealand sources. The full review is contained in
Working Paper 1, Policy and Practice Literature Review.

2.1 Higher Density Housing: The Literature
Intensification is a response to the challenges that increasing urbanisation places on the
resources consumed in urban areas and the competitiveness of cities. Promoting higher
residential densities is one part of the package of measures favoured to help achieve this.

Higher densities can be pursued by a range of policies. These include limiting the outward
expansion of cities, creating zones allowing or promoting multi-unit development,
redeveloping brownfield sites, providing for mixed use (encouraging housing, commercial,
and service activities to locate close together), infilling underdeveloped sites, promoting
increased inner city living, and redeveloping town centres.

2.1.1 What is Residential Intensification? Housing Density

Housing, dwelling, or residential density is usually measured as dwelling units per hectare.
However, the nature of density is not straightforward.

Perceived density is based on individuals‟ estimates of people in a given area and the
organisation of the space available. Crowding occurs when this perception is negative
(Rapoport, 1975).      The same density can be evaluated differently under different
circumstances, by different people, and in different cultures (Churchman, 1999).

The denominator in the density equation, the area of land, may be defined by site, street,
suburb, or city. It may exclude non-residential land uses, although this is inconsistent with
promoting mixed use where the presence, style, and condition of non-residential buildings
will influence perceived density. The tendency is to use gross densities.

Density may also be measured in terms of habitable rooms per hectare (RPH), often used as
a technical indicator of crowding (Forsythe, 2003) or people per hectare (PPH). DPH may
increase more rapidly than PPH. In an ageing population falling household sizes in fact
mean more dwellings are required to house the same population. In particular, infill
development through the subdivision of sections and the addition of one or more dwellings
may contribute to only a slight increase in densities without necessarily bring about a
significant change in population (Bray Sharpin, 2006; Whitehead, 2008).

Housing density may be divided into low, medium, and high categories to set policy targets.
These terms, which are context specific, can be associated with different building styles.
Intensification is then promoted by promoting these housing styles, from detached through
semi-detached and terrace housing, to apartment buildings of varying mass.

                                                                                      Page 3
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